Can we use PayPal for tax deductible donations?
- Yes, create a case in your space project, assign to James, we will make you a button that you can use anywhere you might make a button. We can also make you other payment processing buttons. Just ask. Funds collected are earmarked on the accounting backend, and can then be transferred to your Paypal account or we can send you a check.
- In a calendar year, the IRS lets individuals claim $250 in donations without providing a receipt. The total value of whatever they contributed in that year is generally not examined. If a person makes a donation and expects to deduct it, fill out the Donation Form and we will issue them a receipt.
- For example, if you have a member who pledges a $50 gift 6 times in a year, at the end of the year we will issue them a receipt for $300 in contributions to your space.
- Membership dues should be paid directly to your space. They are not tax deductible. In general, if you trade for something, it’s not deductible. Membership is a benefit, you’re giving people something in exchange for their money which means it’s not a gift.
- If a member decides to pay more than their membership dues, the amount above the membership dues can be considered a gift even if it is all in one payment.
- If someone sponsors a membership, that is tax deductible. (?)
How do we handle physical donations like equipment?
- Figure out the Fair Market Value of the donated item. This can be done using an internet search for the current sell price of similar items, such as on Ebay.
- Fill in the Donation Formusing that value as the value of the donated item, and we will issue the contributor a receipt for the item.
- If the donor requires a physical copy immediately, please call us at 414-215-0215 and we’ll do our best to get a receipt quickly. Normally receipts can take a few days to issue via mail or email to the donor.
- School Factory does not take 10% of the FMV on non-cash goods. (?)
- Your space will control the asset and be responsible for its use. There are some restrictions to donated items and equipment. For more information please see IRS Publication 2303, Donations of Non-Cash Items [TBD: James]
- The School Factory will list the asset on its inventory and books.
- You are responsible for insuring the asset.
- Once your space becomes part of the Group Exemption, we will transfer literal ownership of the asset to you in the accounting and asset tracking system.
What is our status in relation to School Factory?
- You are a member of the Space Federation, a program of School Factory, and therefore considered a fiscally sponsored program of School Factory.
- You are also your own organization.
- You only need to tell people about that when you’re asking people for money to be given to you and want to offer them a tax deduction.
- Hopefully you will mention it because you like us and want to show you’re a part of a larger community. We really appreciate it when people talk about us from the perspective of the individual spaces. We want more people to benefit from this collaboration. We ask that you have a small logo on your website or “about” section that says you’re a part of the Space Federation/School Factory
- Most grant-making organizations such as foundations and governments require your organization to be a 501(c)3 in order to receive their funding.
- Being fiscally sponsored means you can apply for grants through the School Factory’s 501(c)3 status.
- You can apply for any grants you want. You will need to include information about your Fiscal Sponsorship with the grant application, so the foundation or agency giving you funding is aware of your relationship to the School Factory. Typically a copy of your Fiscal Sponsorship Agreement is what any foundation will require.
- If the grant requires additional information, please create a case and assign it to us for review.
- Depending on the Fiscal Sponsorship Policies, some grants require School Factory review--like those over $5000.
- If the foundation awards you funding, we will then pay it to you according to the Fiscal Sponsorship Policies.
Where should we mail donation checks?
Attn: Space Federation
School Factory, Inc.
706 S 5th St
Milwaukee, WI 53204
Who are they made out to?
- Checks for gifts should be made out to School Factory
- Put the name of your space and the name of the project or event with which the donation is associated in the memo field or include a small sheet of paper with that information.
- Fill out the Donation Form with the information from the donor, so we can issue a receipt.
- Create a case in Atrium and assign to James, we will then sign up for the service on behalf of the organization or user you specify.
- We can order it and bill you for the price, and have it shipped to you.
Where does the 10% of monetary donations The School Factory keeps go?
- Annual audits by our accounting firm, which are required for non-profits (cost between 1200 and 3000$)
- Maintaining active Directors and Officers insurance ($1200/yr)
- Managing and reporting fiscally sponsored expenditures to the IRS and coordinating data collection activities (varies but based on part time position, we pay about $12,000/year for this)
- Advocacy for fiscally sponsored projects with insurance agencies, government agencies, and municipal bodies
- Mentoring and general advisory support for programs
- Reviews of grant applications made by organizations
- Issuing receipts and letters to donors
- Filing the annual tax return for member organizations (you would not have to do your own Federal tax return) (cost varies between $1200 and 2200$)
Do we have to be in the same city or state as the umbrella organization?
You say that we don't owe you anything for physical donations - is this still the case for very large items (say a building)?
- We would account for this annually. Track each donation and then we would settle up with you quarterly or annually. Things like "buildings" have other requirements-- for example, if a non profit owns a building it typically doesn't have to pay property taxes so there would be other implications. We would have to explore that particular situation in more depth if it comes up. In either case, you would still the owner of the asset. If someone contributed a building to you for free, we would have to list the amount of its value as a contribution and issue a receipt and all that, and then we would have to transfer the title to your space thereafter. I imagine we would negotiate a suitable cost for doing this based on the actual cost of whatever legal fees and other fees might be involved in a transaction like this, but what would *not* happen is, say, "the building is worth 100000k, you got it for free but you now owe us 10000$." In other words, if it is not money, we won't make you pay any more than is required to legally account for the transaction (in terms of lawyers or accountants.)
I know donations must be used for their stated use, but what if there are funds left over?
- It depends on the funding source. It will depend on whether the donations are restricted or not. Most foundations have some terms and conditions on their gifts. Other granting agencies may give unrestricted gifts, meaning you can use them how you wish.
- If it is a foundation, it will depend on how the foundation wants to proceed.
- If it is a bunch of donations from people, put a disclaimer in from the beginning that if the funds are not used for the project, they will be used by the organization for other purposes.